Most European Stocks Fall, Led by Banks; Ericsson Shares Rally
Most European Stocks Fall, Led by Banks
Hannelore Foerster/Bloomberg
A trader speaks on a cell phone as he works at the Frankfurt Stock Exchange.
A trader speaks on a cell phone as he works at the Frankfurt Stock Exchange. Photographer: Hannelore Foerster/Bloomberg
Sept. 8 (Bloomberg) -- Christopher Wheeler, an analyst at Mediobanca SpA, talks about the outlook for European banks. He speaks on Bloomberg Television's "On The Move" with Francine Lacqua. (Source: Bloomberg)
European stocks rose to a four-month high as improved demand for government bonds from Portugal to Poland helped ease concern about sovereign debt and shares of BP Plc advanced.
BP gained for a seventh straight day as its credit rating was raised three levels and the company released its internal investigation on the Gulf of Mexico oil spill. Sanofi-Aventis SA rose 2.1 percent after Citigroup Inc. raised its price estimate for the drugmaker by 15 percent. Ericsson AB climbed 4.6 percent as Credit Suisse AG recommended the world’s largest maker of wireless phone networks.
The Stoxx Europe 600 Index gained 1 percent to 262.33 at the 4:30 p.m. close in London, its highest level since April 26, as all 19 industry groups advanced. The gauge, which slipped 0.5 percent yesterday amid lingering concern about the region’s debt crisis, is still down 3.6 percent from this year’s high on April 15 as a measure of the region’s banks tumbled 6.9 percent.
“The market remains very volatile so we are seeing relatively sharp reactions to positive news,” said London-based Henk Potts at Barclays Stockbrokers in London, which oversees about $218 billion. “It just shows that investors are still very nervous. BP is helping markets but it’s coming from a very lower base after some turbulent times. There is still a lot of uncertainty revolving around the company.”
Portugal, Poland
Stocks rebounded today after Portugal’s sale of bonds due 2021 attracted bids for 2.6 times the amount offered, compared with a bid-to-cover ratio of 1.6 in the earlier March sale. An auction of five-year debt by Poland attracted the biggest demand since 2008, while Czech borrowing costs fell to a record low at a sale of three-year bonds.
National benchmark indexes rose in 14 out of 18 western European markets today. France’s CAC 40 gained 0.9 percent and the U.K.’s FTSE 100 increased 0.4 percent. Germany’s DAX Index advanced 0.8 percent.
BP climbed 1.3 percent to 412.15 pence after the company’s long-term issuer default rating and senior unsecured rating were raised to A from BBB by Fitch Ratings. The agency assigned a stable outlook to the rating reflecting “an end to the threat of leaks” from the Macondo well in the Gulf of Mexico.
BP today faulted its own engineers for a fatal drilling disaster that triggered the largest U.S. oil spill and said rig owner Transocean Ltd. and contractor Halliburton Co. also must shoulder some of the blame.
Sanofi-Aventis gained 2.1 percent to 47.79 euros after Citigroup raised its price estimate for the French drugmaker by 15 percent to 70 euros, saying the next 12 months could be a “turning point” for the company.
Ericsson, Bwin
Ericsson jumped 4.6 percent to 78 kronor after Credit Suisse reiterated its “overweight” recommendation for the shares. Analysts said they expect Ericsson to “enjoy a robust” second half in 2010 after recently meeting with the company in Asia.
Bwin Interactive Entertainment AG surged 6.4 percent to 41.17 euros after the European Union’s highest court said that German rules that limit the offering of sports betting and lotteries to state-controlled monopolies may be unlawful.
Bank of Ireland Plc dropped 3.9 percent to 69.23 euro cents as the cost of insuring against losses on Irish government debt surged close to a record 403.25, before falling 3.5 basis points to 378, according to data provider CMA.
Ireland’s Finance Minister Brian Lenihan yesterday said the government will extend parts of its banking guarantee to help lenders tap international money markets amid rising concern that the cost of rescuing the country’s financial system is mounting.
Anglo Irish Bank Corp. will be split into two banks by Ireland’s government and part of the lender will be wound down over time or sold, the finance ministry said today in a statement.
‘Major Concerns’
“There are still major concerns around the bank sector,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA. “The uncertainty has not just gone away and certain issues about sovereign debt and capital happen to be two which have popped up and are particularly prominent at the moment,” he said on Bloomberg Television’s ‘On The Move’ with Francine Lacqua.
National Bank of Greece SA tumbled 6.4 percent to 9.73 euros, the biggest drop on the Stoxx 600, after the nation’s largest lender announced plans to raise $3.6 billion. The bank will offer existing shareholders 121.4 million new shares at 5.20 euros apiece to raise 631 million euros ($800 million). It will also sell convertible bonds to raise 1.18 billion euros and offer a minority stake in its Turkish unit, Finansbank AS.
Infineon Technologies AG fell 1.8 percent to 4.25 euros, retreating for a fourth day as UBS AG lowered its recommendation for European semiconductor shares to “underweight” from “neutral,” saying earnings momentum is falling. Rival STMicroelectronics NV lost 1.1 percent to 5.5 euros.
Barratt Developments Plc dropped 4.3 percent to 99.85 pence after Britain’s biggest homebuilder by volume reported a full year loss of 118.4 million pounds ($182.8 million).
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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